Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 5) Regulations 2004
- Act Code: SFA2001-S99-2004
- Type: Subsidiary legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting power: Section 337(1) of the Securities and Futures Act
- Commencement: 4 March 2004
- Legislative status: Current version as at 27 March 2026 (per the provided extract)
- Key provisions: Section 1 (Citation and commencement); Section 2 (Definitions); Section 3 (Exemption)
- Regulatory focus: Exemption from market conduct provisions for “stabilising action” relating to specified notes
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 5) Regulations 2004 (“Stabilising Action (Notes) Regulations”) is a targeted regulatory instrument. In essence, it creates a narrow exemption from certain market conduct rules in the Securities and Futures Act for stabilising activities carried out in relation to a particular issuance of fixed rate notes.
In plain language, the Regulations recognise that, during the initial period after a bond/notes issuance, market intermediaries may need to undertake limited buying or offers to buy in order to support liquidity and reduce volatility. Such conduct can be controversial because it may resemble market manipulation. The Singapore framework therefore generally restricts stabilising behaviour, but allows exemptions where the stabilising is controlled, time-limited, and tied to a specific transaction.
This instrument is transaction-specific: it defines the “Notes” as fixed rate notes due March 2009 issued by Industrial Development Bank of India (principal amount up to US$300 million). It also defines “stabilising action” as actions taken by specified banking entities (Citigroup Global Markets Inc., J.P. Morgan Securities Ltd., or related corporations) to buy—or to offer or agree to buy—the Notes to stabilise or maintain their market price in Singapore or elsewhere.
What Are the Key Provisions?
1. Citation and commencement (Section 1)
Section 1 provides the short title and states that the Regulations came into operation on 4 March 2004. For practitioners, this matters because the exemption can only apply to stabilising action carried out after the Regulations are in force (subject to the Regulations’ own time limits, discussed below).
2. Definitions (Section 2)
Section 2 is critical because the exemption is only available if the conduct falls within the defined terms.
- “Notes” are expressly defined as fixed rate notes due March 2009 issued by Industrial Development Bank of India for a principal amount of up to US$300 million. This means the exemption is not available for other tranches, other issuers, or different maturities.
- “Stabilising action” is defined as an action taken in Singapore or elsewhere by Citigroup Global Markets Inc., J.P. Morgan Securities Ltd., or their related corporations, to buy or to offer or agree to buy any of the Notes in order to stabilise or maintain the market price of the Notes in Singapore or elsewhere.
The definition is broad enough to cover not only actual purchases but also offers or agreements to buy. It also covers stabilisation occurring outside Singapore, provided the action is taken by the specified entities (and the definition expressly includes actions “in Singapore or elsewhere”).
3. The exemption from sections 197 and 198 (Section 3)
The heart of the Regulations is Section 3. It provides that, subject to paragraph (2), sections 197 and 198 of the Securities and Futures Act shall not apply to stabilising action carried out in respect of the specified Notes with either of the following counterparties:
- (a) a person referred to in section 274 of the Act; or
- (b) a sophisticated investor as defined in section 275(2) of the Act.
Although the extract does not reproduce sections 197, 198, 274, or 275, the structure indicates that the Act’s general market conduct prohibitions (sections 197 and 198) are being carved back for stabilising activity, but only when the stabilising is undertaken with certain categories of persons—namely, persons falling within section 274 and sophisticated investors.
Practical implication: even if an intermediary is conducting stabilising action as defined, the exemption is not automatically available for every counterparty. The stabilising must be carried out with the permitted categories. For a lawyer advising an arranger or dealer, this requires careful documentation of the counterparty category and ensuring the stabilising trades are executed within the permitted universe.
4. Time limitation: 30 calendar days from issuance (Section 3(2))
Section 3(2) imposes a strict temporal boundary. Paragraph (1) “shall not apply” to stabilising action carried out at any time after the expiry of the period of 30 calendar days from the date of the issuance of the Notes.
This is a classic stabilisation control: the exemption is limited to the early post-issuance window when price discovery and liquidity formation are most active. After that period, the stabilising conduct would revert to the general market conduct regime under the Act, meaning the exemption would no longer protect the intermediary from liability under sections 197 and 198.
Practical implication: counsel should ensure that internal compliance controls (trade capture, approvals, and monitoring) can demonstrate that stabilising activity ceased within the 30-day window. The phrase “30 calendar days” suggests that weekends and public holidays count; therefore, the calculation should be done precisely from the issuance date.
How Is This Legislation Structured?
The Regulations are concise and consist of an enacting formula followed by three substantive provisions:
- Section 1 (Citation and commencement): sets the short title and commencement date (4 March 2004).
- Section 2 (Definitions): defines the scope of “Notes” and “stabilising action,” including the specific issuer, maturity, principal amount cap, and the authorised stabilising entities.
- Section 3 (Exemption): provides the exemption from specified Securities and Futures Act provisions (sections 197 and 198), subject to counterparty categories and a strict 30-day post-issuance limit.
There are no additional parts or schedules in the extract. The legislative design is therefore “transaction-and-activity specific”: it does not create a general stabilisation regime, but rather grants an exemption for a particular notes issuance and defined stabilising conduct.
Who Does This Legislation Apply To?
The Regulations apply to stabilising action in respect of the defined “Notes” undertaken by the defined stabilising actors—namely Citigroup Global Markets Inc., J.P. Morgan Securities Ltd., or their related corporations. The exemption is therefore not open to every market participant; it is tied to the named entities and their related corporations.
In addition, even for those entities, the exemption is conditional on the stabilising action being carried out with counterparties that fall within section 274 of the Act or with sophisticated investors as defined in section 275(2). Accordingly, the Regulations operate as a compliance “gate”: the stabilising entity must be within the defined group, the instrument must be the defined Notes, the counterparty must be within the permitted categories, and the stabilising must occur within the 30-day window.
Why Is This Legislation Important?
For practitioners, the significance of the Stabilising Action (Notes) Regulations lies in how it balances two competing regulatory objectives: (1) allowing legitimate market support activities around an issuance, and (2) preventing abusive conduct that could distort price formation. By exempting stabilising action from specific market conduct provisions, the Regulations provide legal certainty to intermediaries participating in the issuance process—provided they comply with the narrow conditions.
The Regulations also illustrate the Singapore approach to exemptions: they are typically precise (transaction-specific), conditional (counterparty categories), and time-limited (30 calendar days). This means that compliance is not merely procedural; it is substantive. A stabilising trade that falls outside the defined conditions could expose the intermediary to regulatory risk under the underlying Act provisions that the exemption otherwise disapplies.
From a deal-execution perspective, lawyers should treat this Regulations as a key part of the legal documentation and compliance narrative for the notes issuance. It informs how stabilisation can be conducted, who can be involved, what counterparties can be used, and when stabilisation must stop. It also supports internal audit trails: demonstrating that stabilising action was authorised, within scope, and executed within the permitted period.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular sections 197, 198, 274, 275(2), and the authorising provision in section 337(1)
- Futures Act (referenced in the provided metadata as related legislation)
- Stabilising Act (referenced in the provided metadata as related legislation)
- Timeline (referenced in the provided metadata as related legislation)
Source Documents
This article provides an overview of the Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 5) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.